Seaboard Corp. 3Q earnings slip

MERRIAM, KANSAS, U.S. — Net income of Seaboard Corp. in the three months ended Oct. 1 was $36,560,000, equal to $30.07 per share on the common stock, down 8% from $39,869,000, or $32.74 per share in the third quarter of 2010. Net sales were $1,476,718,000, up 33% from $1,111,813,000.

Third-quarter results for 2011 included a gain on the sale of power generating facilities totaling $1,500,000, or $1.23 per share.

In the nine months ended Oct. 1, Seaboard net income was $266,910,000, or $219.52 per share, up 48% from $180,251,000, or $146.93, in the same period in 2010. Net sales were $4,343,484,000, up 37% from $3,180,552,000.

For the nine months in 2011, the gain on the sale of power generating facilities was $52,923,000, or $43.53 per share.

Net sales for Seaboard’s Commodity Trading and Milling segment increased $258.9 million and $778.4 million for the three and nine month periods of 2011, respectively, compared to the same periods in 2010. Seaboard said these increases were primarily the result of increased prices for wheat and corn, and increased volumes of commodities sold to both third parties and non-consolidated affiliates. In addition, $101.1 million in net sales were recognized in the first quarter of 2011 related to previously deferred costs and deferred revenues under contracts for which the final sale prices were not fixed and determinable until the first quarter of 2011.

Seaboard noted that the operating income for the Commodity Trading and Milling segment increased $35.4 million and $31.5 million for the three and nine month periods of 2011, respectively, compared to the same periods in 2010. According to the company, these increases for the three- and nine-month periods primarily reflect the $50.2 million and $40.5 million fluctuation of marking to market the derivative contracts. Excluding the effects of these derivative contracts, operating income decreased $14.8 million and $9 million for the three- and nine-month periods, respectively. The decreases were primarily the result of net write-downs of $10.7 million and $14 million in the three and nine month periods of 2011, respectively, for certain grain inventories for customer contract performance issues, as discussed further in Note 3 to the Condensed Consolidated Financial Statements.

Seaboard said that due to the uncertain political and economic conditions in the countries in which it operates, the current volatility in the commodity markets and remaining issues with certain customer contract performance, the company is unable to predict future sales and operating results for the remainder of 2011.